Q2 2024 Fund Performance: A Mixed Bag for Small-Cap and Growth Strategies

Janus Henderson Enterprise Fund Q2 2024 Commentary

Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold. For the most recent month-end performance call 800.668.0434 or visit Products - US Advisor. Broad U.S. equity indices ended the second quarter higher, as signs of moderating inflation raised hopes for Federal Reserve (Fed) rate cuts in the second half of the year. While economic news was generally positive, recent data pointed to pockets of weakness. The market advance was narrow, driven by a handful of large-cap growth stocks with exposure to artificial intelligence. Investors rotated away from small- and mid-cap stocks, and the Russell MidCap Growth Index had a negative return for the quarter. Information technology company GoDaddy (GDDY) was a top contributor to relative performance. GoDaddy has capitalized on its strong market position as a registrar of website domain names to sell other value-added services, such as website design and digital payments support. This strategy has provided additional revenue streams and higher margins, leading to double-digit earnings growth. GoDaddy recently migrated to a new technology platform that enables the seamless bundling of applications, while also incorporating AI to improve the customer experience. Medical device company Boston Scientific (BSX) was another contributor. The stock rose on excitement over the company's U.S. launch of FARAPULSE, a state-of-the-art pulsed field ablation system that treats atrial fibrillation with less damage to surrounding tissues relative to previous therapies. Boston Scientific is currently the only provider of this technology, which taps into a large and growing addressable market. Even beyond our excitement around FARAPULSE, we continue to like Boston Scientific for its diversified product portfolio, which has provided many potential drivers of revenue growth. WEX was a relative detractor after outperforming in the first quarter. WEX issues credit cards that help manage fleet fuel costs. It also owns a cloud-based software platform that supports digital payments for health savings accounts and travel bookings. The stock declined on concerns over competitive pressures for this payments business, especially after WEX's customer Booking.com (BKNG) contracted to take more of its payments business back in house. While this decision may impact WEX's near-term revenue growth, its new contract with Booking.com offers opportunities for additional business wins over the medium term. We felt the sell-off in the stock was out of line with fundamentals and held onto the position. J.B. Hunt Transport Service (JBHT), another relative detractor, provides trucking services, as well as intermodal transport solutions, that support the movement of containers between ships, rails, and trucks. We have long liked the intermodal business because of its high barriers to entry and the cost advantages it offers relative to long haul trucking. However, the broad freight industry has been in a slump for several years, and an anticipated first-quarter recovery now looks like it will be pushed into the second half of 2024. As a result, J.B. Hunt reported weaker-than-expected revenue growth, leading to a sell-off in the stock. On a positive note, we were reassured to see the company remain disciplined in maintaining prices and managing capacity, which has supported its gross margins. We used the share price decline to add to our position. We have argued for several quarters that interest rates could likely remain higher for longer than investors had hoped. It now appears that the market is coming around to this view, with investors only anticipating one or two rate cuts by year-end. At the same time, we have seen more concerns around the trajectory of economic growth, especially given pressures on consumer spending. As investors try to assess the outlook for interest rates and the economy, we could see periods of market volatility. Geopolitical uncertainty and slower growth in countries such as China could also impact market returns. We also see reasons for caution in the recent narrow performance of the equity market, where investors' focus on AI opportunities often overshadowed other investments. While every market cycle is different, we remain concerned about such imbalances. This is especially true in the mid-cap growth market, where a handful of high-valuation stocks have often had an outsized impact on index returns. With the recent reconstitution, the Russell MidCap Growth Index has become even more concentrated around fewer names. While this could lead to more volatility in index returns, it does not change our investment approach. Rather than trying to mimic the index, we remain steadfast in our commitment to bottom-up stock selection as we seek to deliver long-term capital appreciation while managing risk. We continue to seek out companies with strong balance sheets, sustainable competitive advantages, and above-average earnings potential. We also remain disciplined in avoiding investments where we believe valuations are not fully supported by expected earnings growth. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

American Century Small Cap Growth Fund Q2 2024 Commentary

Stocks posted gains. U.S. stocks ended higher. As has been the case all year, performance was driven by companies that have benefited from artificial intelligence and those expected to benefit as AI is incorporated into their businesses. Growth stocks led performance. Stock gains were almost entirely due to the outperformance of large-cap stocks, especially select large-cap growth stocks that were positioned to benefit from enthusiasm about AI. Although growth stocks outperformed across capitalization ranges, mid- and small-cap stocks ended the month lower. Information technology was a solid contributor. Our performance in the sector was helped by not owning Super Micro Computer (SMCI). An overweight allocation to semiconductors and semiconductor equipment stocks relative to the benchmark was also helpful. Biotechnology benefited performance. Stock choices in the biotechnology industry led health care sector outperformance. Pharmaceuticals also contributed positively. Consumer staples stocks weighed on performance. Stock choices in the sector detracted from performance, led by consumer staples distribution and retail. Not owning Sprouts Farmers Market was a significant detractor. Super Micro Computer. This distributor and manufacturer of high-performance supercomputer technologies benefited from demand for artificial intelligence servers earlier in the year, but the stock sold off after its quarterly report disappointed amid high investor expectations. Our lack of exposure to the stock benefited performance. Expro Group Holdings (XPRO). After weak execution in mid-2023, the oil field services company returned to what we believed was solid execution, reflected in earnings and guidance above analyst expectations. ADMA Biologics (ADMA). This biopharmaceutical company focused on plasma protein therapeutics exceeded investor expectations for revenue and profit and raised guidance. SiteOne Landscape Supply (SITE). We believe unfavorable weather, slowing new home construction and falling prices in some of the raw materials it distributes caused a reduction in earnings guidance for this distributor of landscaping products. The AZEK Co. (AZEK). This manufacturer of composite decking systems lagged despite reporting revenue and earnings that were better than investors had forecast. Our research indicated that delayed interest rate-cut expectations due to inflation also weighed on sentiment for many housing-related stocks. DoubleVerify Holdings (DV). The company provides advertising customers with verification and measurement of advertising placements on key consumer platforms such as social media and entertainment. We eliminated our holding as guidance was weak for the second straight quarter although quarterly results were better than expected. FTAI Aviation (FTAI). We established a position in this aerospace financing, service and parts company, which has been transitioning from an aircraft leasing pure play into a diversified aerospace company with a larger mix of profits coming from its replacement parts business. We think the market underestimates the value of this transition. Q2 Holdings (QTWO). We initiated a holding in this provider of virtual banking software. Our research indicated that a war for deposits has been driving demand for new technology. Banks want to upgrade and consolidate their online systems, and we think Q2 is positioned to benefit from being a single platform with an easy user interface driven by the need for deposits and fraud protection. NEXTracker (NXT). We sold our position in this maker of integrated solar trackers and software for solar energy projects. Although it exceeded our revenue and earnings expectations, consensus estimates surpassed our own estimates, while we believed industry-level delays in large projects presented a new risk to performance. Savers Value Village (SVV). We eliminated this thrift retailer. Execution by management has been spotty, in our view. Recent results have been choppier than we'd like for a company that has been aiming to establish a high-quality reputation as a durable-growth retailer. Our process is designed to identify companies producing attractive, sustainable earnings growth. We seek to reduce unintended risks and align the portfolio with company-specific characteristics that we believe will be rewarded over time. As a result of this approach, our sector and industry allocations reflect where we are finding opportunities at a given time. Macroeconomic indicators have weakened, and we remain cautious. The most recent economic data were generally weaker overall from retail sales to housing starts and home sales to industrial production. We believe this has supported the idea that the modest move to expansion in early 2024 was a blip. With housing starts weak, builder confidence slowing, retail sales coming in weaker (notably with the low-end consumer) and small business confidence remaining weak, we have become more worried about when bad news becomes bad for markets as we think it could indicate that the Federal Reserve may need to act to stop a material slowdown in economic activity. We are straddling the line between cyclical and defensive positioning. After adding modestly to cyclicality in the first quarter, we slowed our move away from defensive positioning as economic data turned weaker in the second quarter. We prefer to wait until we see more evidence that the economy is back on course. Our portfolio weightings reflect our caution. We maintained our relative positioning relative to the benchmark with overweights in financials, health care, materials and real estate and underweights in information technology and communication services. Our process is ongoing. Although we have slowed our move to greater cyclicality in the portfolio, we continue to evaluate our positioning regularly, while applying our bottom-up process to find what we believe are the best opportunities. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

American Century Focused Dynamic Growth Fund Q2 2024 Commentary

The holdings listed should not be considered recommendations to purchase or sell a particular security. Equity holdings are grouped to include common shares, depository receipts, rights and warrants issued by the same company. Fund holdings subject to change. Stocks posted gains. U.S. large-cap stocks broadly moved higher. Performance continued to be largely driven by the stocks of companies currently benefiting from artificial intelligence and those expected to benefit as AI is incorporated into their businesses. Large-cap growth stocks led performance. Stock gains were mostly due to the outperformance of large-cap stocks, especially select large-cap growth stocks that benefited from optimism about AI. Value stocks struggled across the market- capitalization spectrum, as did mid- and small-cap growth stocks. Biotechnology benefited performance. Stock choices in the industry were positive and contributed to outperformance in the health care sector. Alnylam Pharmaceuticals (ALNY) was a top contributor. Consumer discretionary was a top contributor. Sector outperformance was due to stock selection. Avoiding specialty retailers was advantageous as the industry suffered from a slowdown in consumer spending and a weak housing market. Information technology detracted. Stock selection and an underweight in the sector relative to the benchmark hampered performance. Not owning Apple (AAPL) was a significant detractor. Software also weighed on performance. Nvidia (NVDA). The stock price of this leading maker of graphics processing units continued to soar on the strength of demand for its chips in artificial intelligence applications. In May, Nvidia reported quarterly revenue and earnings that beat already high analysts' estimates and raised guidance. Alnylam Pharmaceuticals. The biopharmaceutical company's stock rose sharply after it reported strong positive results for its heart drug in late-stage trials. Alnylam is a leader in RNA interference, a new treatment modality that could address a broad range of diseases, and has several drugs on the market and in development. Alphabet (GOOG,GOOGL) . Google parent Alphabet reported strong results with earnings, revenues and margins driven by strength across all major business segments. Management attributed results to Alphabet's investment in its AI capabilities. Alphabet also announced a large share repurchase program. Apple (AAPL). Having no exposure to the consumer electronics giant's stock hurt performance compared with the benchmark. With some artificial intelligence features available on the next iPhone, investors expect a more robust iPhone 16 cycle. We also believe Apple does not fit our focus on early stage growth companies. salesforce.com (CRM). The stock of this subscription-based business software company fell sharply after it missed revenue expectations and offered weak guidance. However, we continue to believe that there are growth and margin expansion opportunities for the company. Block (SQ). The financial services firm lagged despite posting better-than-expected quarterly results, driven by Square, its digital payments division. We think investors may have been concerned about Block's heavy investment in cryptocurrencies, and there were reports that the company's compliance policies were undergoing federal scrutiny. ARM Holdings (ARM). ARM is a U.K.-based company benefiting from the demand for artificial intelligence chips. ARM licenses its technology to chipmakers and others to facilitate effective, energy-efficient design. Our research indicated the company has a deep competitive moat due to its technological prowess, economies of scale and high switching costs for customers, among other factors. No positions were liquidated during the period. Our process uses bottom-up financial analysis aimed at identifying large-cap companies that we think have the potential to produce attractive long-term earnings growth. We seek to reduce unintended, nonfinancial risks and align the portfolio with company-specific risks that we believe will be rewarded over time. As a result of this approach, our sector and industry allocations reflect areas of the market where we believe we are finding opportunities at a given time. Corporate earnings often drive returns. Corporate earnings are key in our opinion because we see stock returns as a function of earnings growth often indicating the price investors are willing to pay for those earnings. We've seen some companies recently issuing earnings guidance that have pushed up full-year 2024 estimates. We believe this reflects a stable economy with firms able to navigate the current environment despite significantly higher interest rates. However, because the market is typically forward-looking, trading on expectations of future growth, we expect investors to focus more on 2025 earnings estimates, which we think could be a bit high as future earnings often depend on the broader economy and Federal Reserve (Fed) interest rate policy. We believe the more restrictive the Fed stays, the more difficult the environment could be for future earnings growth. We think several secular trends remain in place. We believe market uncertainty will likely remain high as investors shift their focus from the Fed's interest rate policy to other aspects of the economy such as the pace of growth and corporate earnings. While consensus earnings forecasts for 2024 and 2025 predict solid growth, we believe, even using these lofty projections, that valuations on large-cap stocks look expensive. Having said that, we acknowledge that the earnings of a handful of large growth companies have been excellent, in our view. In this environment, we continue to seek companies that we think can benefit from enduring, secular business trends while growing earnings. Examples of the types of companies that we have found attractive include those involved in digital advertising and business transformation, the reliance on the cloud and mobile, process automation and electric vehicle adoption, among others. We believe productivity is central to profit growth. We have seen lasting challenges to productivity growth in the movement toward nationalism, deglobalization and demographic trends of social inequality and aging global populations. Worker productivity is critical to corporate profit growth, in our view, and we hope that artificial intelligence and other technologies can help offset these productivity declines over time. Moreover, uncertainty remains high on several fronts, which we think explains the extreme market concentration that we've been witnessing. In addition to the economy, interest rates and inflation, wars and elections introduce other sources of potential volatility. We believe progress on any or all of these fronts could lead to broader market participation. Volatility often presents opportunities. In general, business conditions vary from quarter to quarter and year to year, and stocks go up or down in the near term for any number of reasons. However, we believe companies with solid long-term growth prospects are better situated to ride out uncertainty relating to economic and earnings growth. As a result, we believe our portfolio investments have significant long-term growth opportunities. As ever, we continue to monitor the financial progress and risks of our investments. We seek to utilize short-term volatility as an opportunity to add to positions when we see share prices disconnect from our assessment of long-term true potential. We remain focused on individual security selection. While we believe there's a tendency to think about potential Fed rate changes and economic uncertainty in binary terms, we would argue that individual companies respond differently to macroeconomic conditions. As a result, we've found what we believed were opportunities in diverse companies developing new products and technologies that are transforming entire sectors and industries. We don't view these as top-down solutions. Rather, we rely on our bottom-up, financial research to identify individual companies that we think are innovating and reimagining their competitive landscape. This is why we remain focused on investing in what we consider dynamic, innovative growth companies with healthy balance sheets and cash flows that can improve throughout the economic cycle. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

American Century Small Cap Value Fund Q2 2024 Commentary

U.S. stocks advanced. Stocks rose as investors hoped that a slowing economy and moderating inflation would prompt the Federal Reserve to cut interest rates. Corporate earnings remain strong. Corporate earnings rose in the first quarter and are expected to be higher again in the second quarter. Large-cap growth stocks led U.S. equities higher, while value stocks across the market-capitalization spectrum fell, as did mid- and small-cap growth stocks. Consumer discretionary lagged. Stock choices, especially in the hotels, restaurants and leisure and leisure products industries, hampered returns. Sector weakness resulted from slowing discretionary spending and in some cases from stock-specific factors, such as increased competition. Financials underperformed. Stock selection in the sector hindered returns. An above-benchmark position in EVERTEC (EVTC) detracted as higher costs pressured margins. Regional banks also lagged as investors priced in fewer interest rate cuts than were originally expected for the second half of 2024. Information technology contributed. Investment decisions in the sector helped lift relative returns. Coherent (COHR), a manufacturer of engineered materials and components, was a notable contributor. The company continued to benefit from momentum in artificial intelligence. The announcement of a new CEO was also well received by investors. Coherent. Shares of this leading manufacturer of engineered materials and components have benefited from demand for its optical transceivers used in artificial intelligence applications. Also supportive was the announcement of a new CEO whose decision to join Coherent was seen by investors as an endorsement of the company's AI positioning. The Brink's Co. (BCO). This provider of cash logistics services performed well, with sales and profitability driven by a continued shift toward its faster-growth, higher-margin digital solutions. Axis Capital Holdings (AXS). Shares of this specialty insurer and reinsurer contributed. Premiums written have continued to grow at high-single-digit rates while underwriting profitability remained robust, supplemented by higher investment income. An announced stock buyback also helped buoy shares. Dave & Buster's Entertainment (PLAY). This restaurant operator was hurt by a pullback in casual dining by lower- and mid-tier consumers. However, we believe a remodeling program and an operational turnaround should drive improvements in store productivity and profitability. Brunswick (BC). Although this leading manufacturer of marine products (boats, propulsion systems and electronics) underperformed amid uncertainty in the recreational marine industry, we continue to view Brunswick as a high-quality leader in the marine space. EVERTEC. This payment processing business is focused primarily on the Puerto Rican and Latin American markets. Shares were sluggish as the company continued to digest the recent acquisition of Brazilian peer Sinqia. However, we believe the market has yet to recognize EVERTEC's growth potential. Crescent Energy (CRGY). This exploration and production company, with assets in Texas and across the Rockies, has what we believe is deep, high-quality inventory. The company, which pays a fixed dividend, announced a plan to buy back shares. Visteon (VC). We believe automotive supplier Visteon is well positioned in the electric vehicle business. We initiated a position in Visteon as we believed its stock was trading well below its fair value. Cohu (COHU). Our decision to sell this maker of equipment and consumables used in the testing of semiconductor chips was driven by competitive concerns. We believe Cohu's sales in China have declined recently because the company's products lack sufficient technological barriers to entry, making them vulnerable to Chinese competition. MKS Instruments (MKSI). This stock has performed well on improvement in the company's semiconductor equipment and circuit board-related businesses. However, we sold the position in favor of stocks that we thought had better risk/reward profiles. The portfolio seeks to invest in small-cap companies where we believe the valuation does not reflect the quality and normal earnings power of the company. Our process is based on individual security selection, but broad themes have emerged. Overweight financials. We have been overweight in this sector relative to the benchmark, especially in banks and financial services companies (e.g., payment processors, holding companies and metals brokers), and have avoided mortgage real estate investment trusts (REITs) and consumer finance companies. Our analysis shows that there could be an improvement in banks' net interest income and that fears of an extended period of tight lending conditions are likely overstated. Despite recent volatility, we remain constructive on what we believe are our higher-quality bank holdings. Opportunities in industrials. We continue to like this sector and hold a significant overweight relative to the benchmark. We have identified what believe are higher-quality industrials (machinery, distribution, commercial services). Our research has indicated that many of our industrials holdings have been able to exert strong pricing power during the recent inflationary environment. We believe this pricing power, along with strong unit demand and prudent cost control efforts, has enabled many of our sector holdings to generate significant excess cash flow, which can be used to return cash to shareholders, buy back share and reduce debt. More exposure to energy. After an extended period with an underweight in this sector relative to the benchmark, we now carry a moderate overweight. We added exposure to what we view as higher-quality companies in the oil field services and exploration and production segments. Our research indicates our oil field services holdings tend to have less exposure to oil and gas prices and/or have ties to well production rather than exploration (e.g., ChampionX provides chemical solutions designed to enhance well output). Our exploration and production holdings tend to be run by what we believe are conservative management teams with proven track records of disciplined fiscal management. We have sought to take advantage of recent market volatility in raw materials prices to add to our positions in companies that we believed were more attractively valued. A continued underweight in health care. We remain significantly underweight in this sector relative to the benchmark as we believe valuations have not been attractive. A significant portion of our underweight is driven by our lack of exposure in biotechnology, pharmaceuticals and life sciences tools and services, which, as a group, offer few of the characteristics (strong cash flow, high returns, attractive valuations) we often look for in our investments. Few opportunities in real estate. We remain significantly underweight in this sector relative to the benchmark because real estate companies tend to carry more debt than we prefer. In addition, we believe valuations for higher-quality REITs remain rich relative to other opportunities in the small-cap value space, leaving us with a more limited set of attractive risk/reward opportunities. That said, we have recently consolidated our REIT positioning into a smaller number of what we believe are higher-quality names in the hotel, industrial and health care segments. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Janus Henderson Venture Fund Q2 2024 Commentary

Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold. For the most recent month-end performance call 800.668.0434 or visit Products - US Advisor. Broad U.S. equity indices ended the second quarter higher, as signs of moderating inflation raised hopes for Federal Reserve (Fed) rate cuts in the second half of the year. Economic news was generally positive, supported by healthy job growth. Recent data pointed to pockets of weakness, however, including a growing strain on consumer spending. The market advance was narrow, driven by a handful of large-cap growth stocks, especially technology hardware stocks with exposure to artificial intelligence. Investors rotated away from small caps, and the Russell 2000 Growth Index had a modest negative return for the quarter. Stock selection in the healthcare sector helped the portfolio outperform the index for the quarter, aided by an investment in Globus Medical (GMED), a medical device manufacturer focusing on spinal health. The stock faced headwinds earlier in the year due to skepticism over the company's acquisition of NuVasive, another device maker. The integration with NuVasive has gone more smoothly than expected, and the stock rebounded in the second quarter as investors became more optimistic about the synergies offered by the merger. Globus also reported better-than-expected results and improved guidance. Relative performance also benefited from a new position in Loar Holdings (LOAR), a supplier of highly engineered components to the aerospace and defense industries. Loar benefits from a diversified product portfolio and a sizable aftermarket parts business that has been a source of stable revenues. It has established a strong competitive position and is the sole supplier for many parts that it manufactures. We have been tracking the company for some time, conducting due diligence ahead of its initial public offering ('IPO'). We also built a relationship with its management team, who appreciated our long-term approach to investing. These efforts allowed us to receive a sizable allocation when the company went public in April, and we benefited as the stock rallied strongly following this IPO. We are excited to be early public market investors with this company in an industry that we expect to grow at a faster pace than the broader economy. NICE Systems (NICE), a relative detractor, provides software-based technology solutions for call centers and data security. The stock sold off in the second quarter on news that the longtime CEO is stepping down. The company also reported a modest slowdown in cloud software growth, which added to worries that it may face competition from AI-driven solutions. We believe these concerns are overstated, especially as the company is actually using AI to improve and differentiate its services and improve client outcomes. We continue to hold the position. WEX was another relative detractor. WEX issues credit cards that help companies manage vehicle fleet fuel costs, and it owns a cloud-based payments platform that supports travel bookings and health savings accounts. While the company's first-quarter earnings growth met expectations, investors were disappointed with its second-quarter guidance as it pushed more of its expected revenue growth into the back half of the year. Despite some near-term uncertainty, we continue to believe in WEX's diversified business model. We have cautioned for several quarters that the Fed would take a slower-than-expected approach to rate reductions. The market has gradually come around to this view, with most market participants now expecting only one or two rate cuts by year-end. The outlook for "higher-for-longer" interest rates will certainly have an impact on economic growth. Moreover, we have seen more signs of reduced discretionary spending by consumers pressured by higher living costs and depleted savings. As investors try to assess the outlook for interest rates and economic growth, we could see periods of market volatility. We also see additional sources of uncertainty, including geopolitical developments and weaker economic growth overseas. Despite the crosscurrents in this environment, we remain confident in our ability to navigate this period through our focus on well-managed, profitable growth companies with strong balance sheets, healthy free cash flows, and high returns on capital. We also continue to see opportunities in small-caps stocks, which are trading at historically low valuations relative to large caps. We believe small caps may receive more attention from investors as we start to gain more clarity on the economic and interest rate outlook. We note that small-cap stocks have typically outperformed large caps during periods of declining inflation and in the early stages of Fed rate cuts. We also believe this environment will reward our focus on bottom-up stock selection, as we seek out companies with resilient business models that may deliver strong earnings growth over the next three to five years. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Janus Henderson Contrarian Fund Q2 2024 Commentary

While economic news was generally positive, there were signs that higher living costs were putting a strain on consumer spending. Enterprise software company Oracle was a top contributor to relative performance. The company reported revenue and bottom line metrics that were in line to slightly below consensus; however, it also reported record bookings for new business. This accelerating revenue growth outlook is being driven by AI cloud infrastructure deals and boosted sentiment in the stock. Howmet Aerospace, a manufacturer of specialized aircraft components, was another top contributor to relative performance. The stock experienced a notable performance boost after beating first quarter earnings expectations and raising full-year guidance. The company benefited from a resurgence in air travel, pushing commercial aerospace sales up by 23%. Despite the potential sales impact from Boeing's 737 MAX production challenges, the extended operation of existing airline fleets could lead to heightened demand for spare parts, offsetting concerns. Teleflex, a medical device company, was among the top relative detractors. The stock underperformed in the quarter despite reporting earnings results that were in line with estimates. In a period of very high levels of medical utilization post-Covid 19 for many companies, Teleflex's results, particularly from its key product, UroLift, have been underwhelming. Also weighing on the stock is conservative 2024 guidance due to the impact of recent acquisitions on the business. We remain attracted to the company from a valuation standpoint, as we believe its longer-term growth prospects are undervalued by the market; however, we are monitoring the company's capital allocation decisions to include further M&A and/or share repurchases. Workday, another detractor, develops and sells subscription-based enterprise cloud applications for finance and human resources. The stock declined after the company reduced full-year guidance for subscription revenue growth. The company closed fewer deals than expected in the first quarter, while its revenues per deal declined as corporate customers reduced head count. On a positive note, Workday reported better-than-anticipated margins in the first quarter and announced plans to launch an AI-powered marketplace. We continue to monitor the challenging software spending environment as companies shift their IT budgets toward AI rather than software. The economy continues to demonstrate resilience despite recession anxieties of the past two years. The Fed's shift toward a less hawkish monetary stance, combined with continued secular growth trends in AI, has created a positive environment for risk assets. The top-heavy, narrow market leadership from 2023 has carried over into 2024 as the "Magnificent Seven" stocks have led the S&P 500's rally of 15.3% this year. Excluding those seven stocks, the gain was only 6.3%. 1 The second quarter saw the third-largest quarterly outperformance differential (6.9%) between the market-cap-weighted and the equal-weighted S&P 500 Index since 1989.2 Looking ahead, we see the potential for a broadening of market leadership into other sectors based on the earnings outlook. Consensus forecasts expect profits to reaccelerate for non-Magnificent Seven companies over the remainder of year, while growth rates for Magnificent Seven stocks may decelerate given their tough comparisons. This could narrow the earnings growth gap between the market segments and serve as a catalyst for a wider range of performance. Such diversification in performance could benefit our strategy, as our distinct portfolio provides diverse return drivers across segments, sizes, and styles. Meanwhile, we are finding new opportunities in overlooked areas and remain optimistic about the quality of the individual stocks we own in non-tech sectors, like healthcare, despite lagging performance in this risk-on environment. We would also anticipate small- and mid-cap stocks, as well as companies with financial leverage, to perform relatively well as more accommodative monetary policy takes hold. Funding costs have declined, and companies are regaining access to capital markets to address looming debt maturities over the next couple years. Although the market remains constructive for risk assets, we are aware that investor positioning has become more bullish and crowded in certain segments of the market. Additionally, retail activity remains elevated. This sharply contrasts with positioning six months ago, when high investor cash levels were supportive of future market returns. Overall, we believe our portfolio is well positioned to provide diversified equity exposure that stands apart from the market. The S&P 500's heavy concentration, with the top seven stocks now comprising roughly 30% of the index, underscores the value of our strategy in capturing diverse investment opportunities.

American Century Sustainable Equity Fund Q2 2024 Commentary

Stocks posted gains. U.S. large-cap stocks broadly moved higher. As has been the case for the first half of the year, performance was largely driven by the stocks of companies currently benefiting from artificial intelligence and those expected to benefit as AI is incorporated into their businesses. Large-cap growth stocks led performance. Stock gains were largely due to the outperformance of large-cap stocks, especially select large-cap growth stocks that benefited from optimism about AI. Value stocks struggled across the market-capitalization spectrum, as did mid- and small-cap growth stocks. Information technology hampered performance. Stock selection in the sector had a negative effect on returns, especially in the software industry. salesforce.com lagged as slowing bookings growth has become an increasing concern to investors and as there were questions around the company's AI strategy. Consumer staples detracted. Sector stock choices hampered performance. In the consumer staples distribution and retail industry, Target and Sysco were significant detractors. Financials benefited performance. The sector led relative performance due to stock selection. Underweighting financial services relative to the benchmark was helpful, especially not owning the underperforming Berkshire Hathaway. Intel (INTC). Not owning the semiconductor company was helpful as our research indicated the stock underperformed on softness in personal computers and data centers due to the economic environment and competitive pressures. Berkshire Hathaway (BRK.A). Warren Buffett's insurance and holding company underperformed due to profit-taking and weakness in some stock positions, according to some market analysts. Our lack of exposure was beneficial. Johnson & Johnson (JNJ). The health care giant reported a mixed quarter, missing on sales but beating profit expectations. It also announced plans to purchase Shockwave Medical, paying a premium that investors may have thought was not justified. Not owning the stock aided relative performance. Apple (AAPL). The consumer electronics company outperformed as Apple has been increasingly seen by investors as a leader in artificial intelligence. With some AI features available on the next iPhone, analysts expect a more robust iPhone 16 cycle. Our underweight allocation relative to the benchmark detracted. Prologis (PLD). Management of this industrial real estate investment trust said it expects new supply absorptions to be lower than prior expectations and, as a result, reduced guidance. We believe demand for industrial space should continue to grow, helped by supply chain resilience and e-commerce demand. Schlumberger (SLB). The oil field services company's stock lagged even though it reported a quarter that was in line with analyst expectations and reconfirmed 2024 guidance. Some investors were looking for increased guidance given higher oil prices. The 2024 North American rig count has declined, in part pressured by lower natural gas prices. IDEXX Laboratories (IDXX). We added a position in the animal diagnostics company as we expect it could be the primary beneficiary of increasing penetration of diagnostics in pet health. We also think the company has significant geographic expansion and growth opportunities. YETI Holdings (YETI). We initiated a position in YETI because we expect this outdoor lifestyle brand known for its coolers and drinkware to drive faster growth through an expanded product road map and international expansion. Starbucks (SBUX). Sales trends worsened materially, and investors sold shares of the coffee chain giant without clarity or confidence in management's ability to remedy the situation. We exited the position as we believe pricing and the cumulative effect of inflation remain significant headwinds. Electronic Arts (EA). We eliminated our holding in this video game maker on increasing concerns about growth in the overall gaming market along with the company's slowing growth and lack of a pipeline outside its sports franchises. Our process uses bottom-up analysis aimed at identifying what we believe are growing, large-cap companies demonstrating sustainable corporate behaviors. Rather than screen out certain industries or sectors, we seek to identify companies with what we have determined are the strongest financial profiles, best potential for growth and leading environmental, social and governance characteristics in each sector. As a result of this approach, our sector and industry allocations reflect those areas of the market where we believe we are finding opportunities at a given time. There were few major sector weight changes. Our sector weightings remain relatively close to the benchmark, reflecting our preference for generating excess returns through individual security selection rather than sector allocation decisions. We continue to favor health care. We believe the health care sector remains broadly attractive for its historically dependable earnings growth, comparatively attractive valuations and current golden age of innovation. Our research indicated that demand for health care services has been supported by secular tailwinds from an aging population and build-out of a global health care infrastructure. Life sciences tools and services remains a top-weighted industry in the sector. The addition of IDEXX Laboratories helped increase the relative weight of the sector. We see opportunities in information technology. The emergence of generative artificial intelligence as a theme has sparked increased interest in industries such as semiconductors and software. We believe that, while AI tools have not been broadly deployed, companies have been preparing to integrate AI by investing in solutions that help them better capture and organize data. Our research also shows that the large public cloud providers have invested significant resources to grow their data center capacity as AI will need both increased data storage and advanced computational capabilities. Information technology security remains a priority, in our view. We are underweight in utilities and communication services relative to the benchmark. We believe the utilities sector typically offers fewer opportunities for our investment approach. An underweight to entertainment, media and wireless telecommunication services stocks helps explain our communication services positioning. Our elimination of Electronic Arts reduced our relative position in communication services further. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

American Century Mid Cap Value Fund Q2 2024 Commentary

U.S. stocks advanced. During the quarter, broad U.S. equity markets rose amid moderating inflation, strong corporate earnings growth and weakening employment data. While the Federal Reserve kept interest rates steady, policymakers suggested they may cut rates once by year-end. Large-cap growth stocks led U.S. equities higher. While large-cap growth stocks delivered notable gains, value stocks declined across the market-capitalization spectrum. Mid- and small-cap stocks also fell. Health care detracted from performance. The portfolio's allocation in the health care sector dampened performance during the period. Investors have been concerned with normalizing utilization rates, which weighed on certain names in the health care equipment and supplies industry, such as medical device maker Zimmer Biomet Holdings (ZBH). Industrials weighed on results. The choices of investments in the industrials sector hampered performance. While the portfolio is broadly underweight in industrials relative to the benchmark, it is overweight in construction and engineering, an industry where security selection weighed on results. Financials was an area of strength. Stock selections in the financials sector proved advantageous during the period. Not owning benchmark names in the financial services industry gave the portfolio a lift, while above-benchmark positions in the capital markets and banking industries also helped. Kimberly-Clark (KMB). Shares of this global consumer goods company outperformed after it posted better-than-expected quarterly financial results. Kimberly-Clark continued to drive profitability levels higher while posting healthy levels of sales growth. HP (HPQ). Shares of this technology company advanced as positive data points signaled a turn in the PC cycle, particularly among large corporate customers. Shares were also buoyed by the introduction of artificial intelligence PCs by HP and its peers. Teradyne (TER). Shares of this automated test equipment company rallied after Teradyne reported a strong quarter. Teradyne also provided an improved outlook, driven by increased demand within its semiconductor test business. Zimmer Biomet Holdings (ZBH). Even though this medical device company posted better-than-expected earnings, its shares declined on investors' concerns about health care utilization slowing in the future. We believe Zimmer Biomet's valuation remains attractive, and we expect stable demand and profit margin improvement. Henry Schein (HSIC). This distributor of dental products and supplies underperformed as dental volumes and spending remained subdued. Dentists have not been spending on equipment, and consumers have delayed procedures due to higher interest rates and lower consumer spending. However, we think Henry Schein could expand its profitability. Norfolk Southern (NSC). This railroad company underperformed after an activist investor was successful in electing only three directors to the board's 13 seats. Norfolk Southern's rail volumes also continued to be soft. Graphic Packaging Holding (GPK). We initiated a position in this consumer packaging company because we believe it offers an attractive risk/reward profile. Graphic Packaging continued to pay down debt and divest from low-return businesses, and it has started seeing returns from some of its recent large capital projects. CRH (CRH). We initiated a position in this large provider of building materials. CRH manufactures and supplies aggregates, cement, ready-mixed concrete and asphalt. It also offers paving and construction services. Our research shows that CRH is a beneficiary of higher infrastructure spending and offers a strong balance sheet. Ameriprise Financial (AMP). We exited our position in this financial services company to invest in other opportunities that we believe offered more attractive risk/reward profiles. General Dynamics (GD). Shares of this global aerospace and defense company outperformed. Based on our research, we believe General Dynamics has benefited from strength in business jets and positive defense spending sentiment. In turn, we exited the position and invested the proceeds in opportunities that we believe offer more favorable risk/reward profiles. The portfolio seeks to invest in companies where we believe the valuation does not reflect the quality and normal earnings power of the company. Our process is based on individual security selection, but broad themes have emerged. Higher-quality stocks may offer resilience. We believe that while central banks may enact small cuts to interest rates if inflation continues to subside, the economy will likely still experience lagging effects of elevated rates this year. That, along with continuing geopolitical risks, could contribute to an uncertain economic environment for investors. Against this backdrop, we continue to focus on companies that we think are of higher quality because of their stable revenues and profits, low debt levels, stable cash flows and predictable business models that are typically less sensitive to economic conditions. Attractive valuations in health care. Our research has led us to several health care stocks that we think offer compelling valuations and risk/reward profiles. We believe health care is less sensitive to the cyclical effects of the economy than other sectors because the economy's performance tends to have less impact on demand. We think health care utilization rates should continue normalizing after the COVID-19 pandemic caused patients to delay services and procedures. Our research also indicates that shares of companies affected by sell-offs from so-called weight-loss drugs should continue to recover. Opportunities in consumer staples. With slowing global growth, we have identified what we believed were select opportunities in the less cyclical consumer staples sector. Our research indicates that despite a challenging cost inflation environment, many consumer staples companies have been generating strong returns on capital, buying back stock and growing dividends. Moreover, industry consolidation has enabled companies to pass higher costs to consumers. We believe actions to offset inflation, including fewer discounts and more price hikes, should support earnings and margins. Navigating the financials sector. Regional banks continue to face pressure amid a tight lending market. Bank failures from last year led to increased regulatory capital and liquidity requirements, posing another headwind to regional banks. Select insurance companies, which suffered last year due to larger payouts from catastrophes, have emerged with improved pricing power resulting from easing regulations on rates and competitors withdrawing from certain disaster-prone markets. Limited opportunities in consumer discretionary. Our portfolio remains underweight in the consumer discretionary sector relative to the benchmark. We believe this sector has few high-quality companies with durable business models. Also, given factors like inflation and diminishing personal savings, we expect headwinds will continue to dampen discretionary spending. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

American Century Focused Global Growth Fund Q2 2024 Commentary

Global stocks were mixed. In the second quarter, U.S. and emerging markets stocks advanced, while non-U.S. developed markets stocks declined. First-quarter U.S. economic growth slowed to the lowest point since early 2022, and inflation moderated slightly, feeding investors' hopes for Federal Reserve (Fed) interest rate cuts. Meanwhile, the European Central Bank cut rates for the first time in five years. U.S. rate-cut expectations grew. Though the Fed kept interest rates steady during the quarter, policymakers suggested they may cut rates once by year-end. Weakening employment data heightened the expectations, with the unemployment rate reaching 4% in May and the number of U.S. job openings declining in April. Toward period-end, the futures market priced in a 63% probability of a 0.25% Fed rate cut in September. Real estate limited results. Security selection and an overweight relative to the benchmark in real estate had a negative impact on performance compared with the benchmark, with real estate data provider CoStar Group (CSGP) and Prologis (PLD), a logistics-based real estate investment trust and warehouse giant, underperforming. Selection in the communication services sector weighed on performance. The portfolio's lack of investment in Alphabet (GOOG,GOOGL) , the parent company of Google, and a position in Cellnex Telecom (OTCPK:CLNXF) detracted from performance compared with the benchmark. Consumer discretionary selections lifted returns. Security selection in the consumer discretionary sector benefited performance compared with the benchmark, with a position in Amazon outperforming. An underweight allocation was also beneficial. Nvidia (NVDA). Shares of the chipmaker rose amid continued investor enthusiasm for the company's artificial intelligence products, resulting in Nvidia becoming the world's most valuable company, surpassing Microsoft and Apple. Nvidia's 10-for-1 stock split also took place in June. HDFC Bank (HDB). The stock of India's largest private sector bank rose following a financial report that included growth in deposits and an improved loan-to-deposit ratio. Results from the region's recent election also benefited HDFC's share price. AstraZeneca (AZN). Relative returns were buoyed by our position in AstraZeneca. The pharmaceutical giant's stock recently advanced on quarterly earnings and revenue that beat analysts' expectations, driven in part by sales of its oncology treatments as well as management's efforts to improve gross and operating margins. Apple (AAPL). A lack of investment in Apple weighed on performance compared with the benchmark. Shares of Apple recently rose on news of an analyst's upgrade, which highlighted the company's privacy focus for its artificial intelligence platform. A staggered rollout of AI features is also expected to prolong the sales cycle of its current iPhone. CoStar Group (CSGP). Shares of this real estate data provider declined after an announcement that the president of its Homes.com business unit planned to leave the company. Workday (WDAY). Investor sentiment dimmed on this software provider after the company released somewhat pessimistic guidance for 2024 growth in subscription revenue. However, Workday's first-quarter sales and earnings figures topped analysts' estimates. The Williams Cos (WMB). Williams is one of the leading providers of infrastructure (largely pipelines) that safely deliver natural gas to customers in the U.S. We anticipate that Williams' growth will benefit from rising U.S. natural gas production over time as volumes and demand for transportation rise. Bank Central Asia (OTCPK:PBCRF). We added this leading, high-quality Indonesian bank to the portfolio after a period of relative weakness. The bank continues to realize strong operating performance, and we expect it to sustain high-single-digit earnings growth. Despite this positive outlook, its shares have recently underperformed peers. CoStar Group (CSGP). We decided to exit this position on evidence of a deceleration in agent membership growth at its Homes.com division, which has introduced near-term risk to the company's earnings. While we believe the long-term prospects remain attractive, the timing of reacceleration is uncertain. Pioneer Natural Resources. The company was acquired by Exxon Mobil (XOM). The portfolio continues to invest in companies we believe are strong and improving and have improvement that is sustainable. Our process is based on individual security selection. Some of the portfolio's key holdings are highlighted below. Nvidia. We believe this semiconductor company will continue to see strong demand for its chips, fueled by increased adoption of artificial intelligence (AI), along with other long-term growth trends such as cloud computing and online gaming. Microsoft. Microsoft is mainly a provider of enterprise software and services. The evolution of its business model toward subscription based software and services has improved the predictability of its operating results and accelerated its growth trajectory. Amazon. We believe margins for e-commerce company Amazon will be boosted by the growing impact of advertising on its bottom line, its cloud computing services and rising sales derived from third-party sellers. Long-term revenue growth remains sustainable, and the company remains a dominant global e-commerce player. Meta Platforms. Social media conglomerate Meta's businesses are inflecting positively, driven by digital advertising growth, pricing and cost discipline. The company has addressed competitive pressure via Reels, its short-form video product. In our view, the stock's valuation remains attractive given the growth profile. Novo Nordisk. We believe the pharmaceutical company will continue to see accelerating growth as its GLP-1 drugs are used to treat obesity. Obesity remains a big and costly issue in the U.S. and globally. Recent indications that those drugs may have a positive impact on cardiovascular events provide future growth potential. ASML Holding. This chipmaker stands to benefit from evidence that interest and demand trends in generative AI will fuel incremental growth in the server/data center market, which will in turn be a strong driver of future silicon wafer consumption. ASML recently upgraded its end-market growth assumptions. AstraZeneca. This biopharmaceutical firm focuses on the discovery and development of therapies in the autoimmunity, infection and neuroscience areas.We think the firm's earnings will inflect higher because of an attractive new product pipeline. Mastercard. Mastercard operates a credit/debit card network system. The increasing penetration of credit and debit cards is a key driver to the improving profitability at Mastercard. It is a beneficiary of a long-running secular tailwind from e-commerce and electronic payments. HDFC Bank. This India-based company is a leading financial services firm with double-digit loan growth, expanding net interest margins, high return on equity and low operating costs. We believe the bank will continue to take market share from state-owned peers, which have been weighed down by poor management and problem debt. Danaher. Danaher provides tools, consumables and services to the biotechnology and health care industries. It has restructured its business over the last five years, resulting in higher visibility of revenue growth and greater profitability. Danaher is tied to industries benefiting from longer-term secular growth drivers. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Janus Henderson Balanced Fund Q2 2024 Commentary

The yield on the U.S. 10-year Treasury ended the quarter at 4.40% relative to 4.20% at the end of March. Corporate investment-grade credit spreads widened marginally to 94 basis points (bps), while high-yield credit spreads also ended the quarter slightly wider, at 309 bps. The portfolio, which seeks to provide more consistent returns over time by allocating across the spectrum of fixed income and equity securities, outperformed the Balanced Index, a blended benchmark of the S&P 500 Index (60%) and the Bloomberg U.S. Aggregate Bond Index (40%). Asset allocation positioning benefited relative performance, with an overweight to equities versus the Balanced Index and a corresponding underweight to fixed income, aiding results as equities outgained bonds. Security selection in the equity and fixed income asset classes was additive to relative performance. We entered the quarter with approximately 63% in equities and 37% in fixed income and closed the quarter with roughly the same allocation. The equity allocation outperformed the S&P 500 Index. Stock selection in healthcare and information technology contributed to relative performance, while stock selection in the consumer staples and consumer discretionary sectors detracted. The portfolio's stronger growth bias, including an overweight to the information technology sector, aided relative performance as investors gravitated to companies tied to the AI growth theme. Chipmaker NVIDIA (NVDA) was among the top contributors to relative performance. The company reported very strong revenue and earnings growth, fueled by soaring demand for its graphics processing units (GPUs) from data centers investing to support the deployment of generative AI. Semiconductor manufacturing equipment company KLA was also a top contributor. The company delivered solid earnings results and an even more impressive outlook, with growth set to accelerate through the remainder of 2024 and into 2025. Mastercard (MA), a leading payment processor, was among the top detractors from relative performance. Shares pulled back after the firm lowered full-year guidance, citing foreign currency headwinds from the strong U.S. dollar. Also, a longstanding lawsuit on fees that merchants pay Mastercard and other credit card companies continued to weigh on stock sentiment. Consulting firm Accenture (ACN) was another top detractor. The company's growth slowed due to a shift in IT spending toward AI and away from legacy software projects. Although the company's effort to grow new generative AI consulting business was successful, it did not offset declines elsewhere in the business. The fixed income allocation outperformed the Bloomberg U.S. Aggregate Bond Index. The key drivers of outperformance were sector allocation and security selection decisions - specifically, our overweight allocations to securitized credit and high-yield corporates, and security selection within investment-grade corporates. In securitized credit, we have maintained our overweight exposure. We did trim our allocation to agency mortgage-backed securities (MBS) over the quarter, though we remain overweight MBS risk. In high yield, we increased our allocation as we were able to identify attractively priced assets in the new issue market. With respect to yield curve positioning, we entered the period with a modest duration overweight and actively managed duration throughout the quarter. We closed out the period with a small duration overweight as we believe rates are likely to fall in 2024 due to declining inflation. We also like the defensive characteristics of higher-duration exposure in the event the economy cools more quickly than expected. As we enter the second half of 2024, we believe the U.S. economy continues to provide a solid foundation for investment opportunities across equity and fixed income markets. We are starting to see some softening in the economy and the labor market, but we do not believe this is cause for investor concern. The economy appears to be slowing but not stalling, and this is key to bringing inflation back to target, ultimately unlocking rate cuts. Low unemployment, steady job growth, robust corporate earnings, and relatively healthy consumer balance sheets contribute to an overall strong economic backdrop. Equity and corporate credit markets have embraced this optimism, pricing in a soft-landing scenario. S&P 500 earnings estimates project over 10% growth both this year and next, a forecast that appears realistic based on company interactions. However, the realization of these estimates may hinge on two critical factors: productivity and innovation. Recent gains in U.S. labor productivity are particularly encouraging. Non-farm labor productivity has increased between 2.4% and 2.9% year-over-year in each of the last three quarters, significantly above the 1.5% 10-year average. This uptick bodes well for corporate margins and may help mitigate inflationary pressures. The productivity gains are particularly evident among tech and Internet firms, many of which streamlined operations while maintaining or growing revenues. Regarding innovation, in order to capitalize on productivity trends in equities, we're focused on two key areas: AI infrastructure providers offering enabling technologies and large-scale companies leveraging these technologies to improve efficiency and growth potential. While AI dominates innovation discussions, breakthroughs extend beyond tech into sectors like healthcare, with advances in gene editing and AI-based diagnostics. In terms of equity market risks, we are monitoring consumer spending trends and the dampening effects that higher interest rates can have on long-cycle capital spending. Consumer spending, while still resilient, has shown signs of a slight slowdown. High-income consumers continue to spend on travel and experiences, while more leveraged consumers are becoming increasingly selective. The construction industry is another area of focus, with weakening data in housing, multifamily homes, and manufacturing capacity. However, government and non-residential spending remains robust, driven by data center and chip manufacturing plant buildouts. In the fixed income market, we believe we are at the beginning of a Fed rate-cutting cycle. While the start date and cadence may be open questions, the fact that the Fed is shifting cycles is positive for fixed income markets in the long run, both from a returns and a diversification perspective. Overall, we favor an overweight to both credit spread risk and interest rate risk, as corporates and consumers remain largely resilient and the Fed readies itself for rate cuts. Regarding our overweight to corporates, we acknowledge that spreads are tight versus historical metrics. But the favorable macroeconomic environment, coupled with strong technicals and fundamentals, continues to support these valuation levels. We are closely monitoring valuations in light of the economic landscape and are ready to adjust as required should conditions change. Additionally, we seek to find attractive opportunities in the primary issue market and in securitized credit sectors, which look cheap versus corporates on a relative value basis. As always, we will dynamically adjust each of the equity and fixed income allocations and the portfolio's overall mix between equities and fixed income as we analyze the risks and opportunities in each market.

American Century International Growth Fund Q2 2024 Commentary

Non-U.S. developed markets finished a volatile quarter slightly lower. The European Central Bank cut rates for the first time in five years. European and U.K. stocks advanced, while Japanese equities declined as bond rates of return rose and the country's currency fell against the U.S. dollar. Defensive sectors led, while technology finished midpack as non-U.S. developed markets are not dominated by a few mega-cap names. Steady growth, but signs of a potential slowdown emerged. Company earnings reported early in the quarter showed growth remained strong, with improved manufacturing volumes and steady services growth. Late in the quarter, signs of potential future slowing created a bifurcated growth picture. Cyclical areas of the economy began to show some weakness, but structural growth themes remained intact. Financials positions weighed on performance. Underperformance in the sector compared with the benchmark was mostly due to positions in payments companies. Netherlands-based Adyen sold off after its quarterly earnings report showed a revenue miss. France-based Edenred faced regulatory concerns amid an investigation into tax exemptions for meal vouchers. Hong Kong-based insurer AIA Group and a lack of exposure to outperforming banks were also notable sources of weakness. Materials sector holdings detracted. Construction materials positions, including James Hardie Industries and CRH, were a drag on performance compared with the benchmark. Chemicals industry holdings were also notable detractors, as Air Liquide and Shin-Etsu Chemical weighed most heavily on returns within the group. Information technology positions helped relative performance. Semiconductors industry positioning was the key driver of outperformance in the sector compared with the benchmark. Notables included Taiwan Semiconductor Manufacturing Co., which gave a strong revenue report and announced a share buyback. ASML Holding also helped, as demand for the company's lithography machines has been strong due to increased investment in artificial intelligence. Infineon Technologies also contributed. Novo Nordisk (NVO). Investors reacted positively after the pharmaceuticals company made two announcements, including a $4.1 billion investment in a new manufacturing facility in North Carolina and approval to launch its weight management injection, Wegovy, in China. Toyota Motor (TM). The portfolio does not hold Toyota. Given the company's position in the benchmark and its underperformance during the quarter, the lack of exposure was beneficial to relative performance. Taiwan Semiconductor Manufacturing Co. (TSM). The semiconductor manufacturer's stock rose after its May revenue report showed a year-over-year increase and the company launched a share buyback. The company also announced plans to raise prices for its 3 nanometer technology and advanced packaging products due to strong demand. Sartorius Stedim Biotech (OTCPK:SDMHF). The company's reported first quarter results fell short of analysts' expectations as demand in consumables picked up, but investment in hardware and systems remained muted, especially in China. Management noted its outlook uncertainties remain high due to the global political and economic situation. Airbus (OTCPK:EADSF). The company faced challenges, including falsified documents related to titanium authenticity. Management lowered guidance for this year, and the stock was downgraded. The Boeing Co.'s acquisition of Spirit AeroSystems Holdings and ongoing supply chain issues also pose potential risks to Airbus' competitive positioning. Edenred (OTC:EDNMF). Shares of the payments company sold off through the quarter as investors weighed potential regulatory risks. The French government has opened a widening investigation into tax exemptions for meal vouchers, which now includes the country's audit body. Nestle (OTCPK:NSRGF). We initiated a position in Nestle as we believe it is likely to see its sales volume accelerate in the second half of the year as destocking wanes. We also think its investments in facility modernization and additional capacity will start to drive growth inflection in 2024. Unilever (UL). We initiated a position in the British multinational consumer products company. The new management team, installed by an activist investor, has demonstrated success as some of its strategic decisions have improved organic growth. Arkema (OTCPK:ARKAF). We sold the position to reduce some near-term cyclical exposure in the portfolio. We see various data points suggesting a potential slowdown in manufacturing activity, and we expect Arkema's volume growth to slow, possibly resulting in downward earnings revisions. UBS Group (UBS). The bank faces a potential new regulatory requirement for significantly higher capital. This would meaningfully reduce the cash return we had originally expected; therefore, we decided to exit the position. The portfolio continues to invest in companies we believe are strong and improving, but share price performance does not fully reflect these factors. Our process is based on individual security selection, but broad themes have emerged. Energy transition and power demand are strong secular forces. As the world moves to rely less on fossil fuels, we are finding opportunities across sectors related to the transition. Increased demand for electric vehicles and large-scale renewable energy infrastructure projects creates inflection points for well-positioned businesses. Artificial intelligence investment is leading to a significant increase in demand for electricity to power data centers. Developments in health care create growth opportunities. Obesity is an area that continues to generate a tremendous amount of growth and investment in the pharmaceuticals industry. Broadly, increased funding for research and development also benefits supporting product and service providers. Governments have committed to major infrastructure investment. Fiscal stimulus programs enacted by governments in recent years have enabled large-scale infrastructure projects to begin. These offer long-term growth opportunities to companies involved in building, and adjacent products and services continue to see strong earnings. Digital transformation supports information technology positions. The acceleration of digitalization and the growth of AI are benefiting the semiconductors industry and technology holdings exposed to cloud computing, automation, digital payments and IT services growth. Consumer companies pivoting from pricing to volume growth. Opportunities emerge as food, fragrances and personal care companies have invested significantly in research and development to create sustainable volume growth for the future. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

American Century Growth Fund Q2 2024 Commentary

Growth philosophy defined by business improvement. We seek to invest in larger U.S. Long-term capital growth by investing primarily companies with improving businesses as opposed to absolute levels of growth. We believe these companies add value over time through increasing earnings growth and the ability to command a higher valuation relative to peers. Returns driven by stock selection. We construct our portfolio to intentionally acquire stock-specific risk aligned with our research while minimizing relative exposures related to sectors and common factor risks, such as market-cap size, volatility and momentum. Team portfolio management by dedicated sector specialists. All members of the team conduct research and participate in portfolio decisions. This provides advantages of efficiency, alignment and accountability. Top 10 holdings (%) Stocks posted gains. Broad U.S. large-cap stock indices moved higher, adding to the strong performance of the first half of 2024. As has been the case all year, performance was largely driven by the stocks of companies currently benefiting from artificial intelligence and those expected to benefit as AI is incorporated into their businesses. Large-cap growth stocks led performance. Stock gains were due to the outperformance of large-cap stocks, especially select large-cap growth stocks that benefited from optimism about AI. Value stocks struggled across the market-capitalization spectrum, as did mid- and small-cap growth stocks. As a result, outside of large-cap growth and large cap core, seven of the nine equity style boxes declined. Information technology hampered performance. Stock selection in the sector was negative compared with the benchmark, especially in the IT services industry. Database software provider MongoDB (MDB) lowered guidance as it fights economic headwinds that are slowing growth. Underweights to Apple (AAPL) and Broadcom (AVGO) relative to the benchmark were other significant detractors. Consumer staples detracted. Sector stock choices hampered performance compared with the benchmark. In consumer staples distribution and retail, Target (TGT) and Sysco (SYY) were significant detractors. Consumer discretionary benefited performance. Stock selection in the sector was helpful compared with the benchmark. Among specialty retail stocks, not owning Lowe's Cos. (LOW) and underweighting The Home Depot (HD) relative to the benchmark aided performance as investors have come to terms with slower and potentially more drawn-out interest rate cuts as the Federal Reserve wrestles with its policy choices. Mastercard (MA). In general, payments stocks have not kept up with the broader market as these companies will see limited benefit from artificial intelligence in the near term. Exposure to lagging overseas markets also hurt. Not owning this lagging stock benefited performance compared with the benchmark. Alphabet. Google's parent company reported strong results with earnings, revenues and margins all higher, driven by strength across all major business segments. Management attributed results to Alphabet's investment in AI capabilities. Alphabet also announced a large share repurchase program. CrowdStrike Holdings (CRWD). Information technology security spending continues to be more resilient to macroeconomic headwinds than other areas of software. CrowdStrike is doing a good job of expanding into product categories adjacent to its core business. The stock was also added to the S&P 500 Index. Visa (V). In general, payments stocks, including Visa, have not kept up with the broader market as these companies will see limited benefit from artificial intelligence in the near term. Exposure to lagging overseas markets also hurt near-term financial results. Apple. The consumer electronics company outperformed as Apple has been increasingly seen as a leader in AI and not a follower. With some AI features available on the next iPhone, expectations are for a more robust iPhone 16 cycle. Our underweight allocation detracted. Broadcom. The semiconductor company increased guidance for its AI business, with strong demand in custom AI accelerators and networking products, and management continued to execute well on profitability. We had some exposure to Broadcom but less than the index, which hampered performance. Pinterest (PINS). We established a position in this image-browsing social media company. Its upgraded advertising platform has resulted in new products and new partnerships with Amazon and Alphabet, which should improve advertising relevance. SAIA. We initiated a position in the less-than-truckload freight carrier as we believe the company is executing well on its growth strategy and should be able to take market share and improve operating margins in an industry with high barriers to entry, rational competition and pricing power. Starbucks (SBUX). Sales trends worsened materially without clarity or confidence in management's ability to remedy the situation. We believe pricing and the cumulative effect of inflation remain significant headwinds. We, therefore, chose to exit the position. Lockheed Martin (LMT). We exited our position in defense company Lockheed to fund better ideas with more upside potential within the industrials sector. Our process uses analysis aimed at identifying large-cap companies producing attractive, sustainable earnings growth. We seek to reduce unintended risks and align the portfolio with company-specific risks that we believe will be rewarded over time. As a result of this approach, our sector and industry allocations reflect where we are finding opportunities at a given time. There were few major sector weight changes. FTSE Russell rebalanced its indices at the end of the period, which changed some of our sector allocations. The changes to the benchmark showed a greater bias toward momentum, resulting in the information technology sector weight going up the most, followed by communication services. Several sectors saw their weights decrease noticeably. These include consumer discretionary, financials, industrials and health care. We see opportunities in information technology. The emergence of generative artificial intelligence as a theme has sparked increased interest in technology industries such as semiconductors and software. While generative AI tools are not broadly deployed today, companies are preparing for this eventuality by investing in solutions that help them better capture and organize data. Simultaneously, the large public cloud providers are investing significant resources to grow their data center capacity as AI will need both increased data storage and advanced computational capabilities. Our health care positioning is highly bifurcated. The sector represents our largest underweight compared with the new index weightings, but that doesn't tell the whole story. Pharmaceuticals is one of our largest industry overweights, led by the big obesity drug makers. However, we have very little exposure to health care providers and services and life science tools and services companies. We see fewer opportunities in consumer discretionary. While U.S. consumers have remained strong, inflation and higher interest rates could reduce spending power for discretionary purchases. Recent data show the labor market weakening, and economists generally agree that excess consumer savings accumulated during the pandemic have been exhausted. The impact of transformational technology isn't limited to one sector. For example, in health care, computational biology is enabling drug discovery that wouldn't have been possible a few years ago. Advances in generative AI technology will likely impact many sectors as companies seek ways to utilize the technology to drive efficiency. Autonomous vehicles will become a reality with 5G networks, and payment networks and digitization are driving online purchases and home delivery. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

American Century Focused International Growth Fund Q2 2024 Commentary

Non-U.S. developed markets finished a volatile quarter slightly lower. The European Central Bank cut rates for the first time in five years. European and U.K. stocks advanced, while Japanese equities declined as bond rates of return rose and the country's currency fell against the U.S. dollar. Defensive sectors led, while technology finished midpack as non-U.S. developed markets are not dominated by a few mega-cap names. Steady growth, but signs of a potential slowdown emerged. Company earnings reported early in the quarter showed growth remained strong with improved manufacturing volumes and steady services growth. Late in the quarter, signs of potential future slowing created a bifurcated growth picture. Cyclical areas of the economy began to show some weakness, but structural growth themes remained intact. Financial services positions weighed on performance. Financials sector underperformance compared with the benchmark was primarily attributable to positions in payments companies. Netherlands-based Adyen (OTCPK:ADYEY) sold off after its quarterly earnings report showed a revenue miss due to weaker fee revenue. France-based Edenred (OTC:EDNMF) faced regulatory concerns amid an investigation into tax exemptions for meal vouchers. Materials sector holdings detracted. Construction materials positions, including James Hardie Industries (JHX) and CRH, were a drag on performance compared with the benchmark. Chemicals industry holdings were also notable detractors, as Air Liquide (OTCPK:AIQUF) and Shin-Etsu Chemical (OTCPK:SHECY) weighed most heavily on returns within the group. Information technology positions contributed. Portfolio holdings in the semiconductors industry were key contributors compared with the benchmark. Notables included Taiwan Semiconductor Manufacturing Co. (TSM), which gave a strong revenue report and announced a share buyback. ASML Holding (ASML) also helped as demand for the company's lithography machines has been strong due to increased investment in artificial intelligence. Within IT services, NEC also added to relative performance. Top 10 Holdings (%) Taiwan Semiconductor Manufacturing Co. The company has benefited from increased artificial intelligence investment. Its May revenue report showed a year-over-year increase, and the company launched a share buyback. The company also announced plans to raise prices for its 3 nanometer technology and advanced packaging products due to strong demand. Novo Nordisk (NVO). Investors reacted positively after the pharmaceuticals company made two announcements including a$4.1 billion investment in a new manufacturing facility in North Carolina and approval to launch its weight management injection, Wegovy, in China. MakeMyTrip (MMYT). Management of the India-based travel services company continues to see strong demand for travel even as other consumer areas experienced moderation. The company has also benefited from economic tailwinds including improving economic growth and travel increasing as a percentage of discretionary spending. Sartorius (OTCPK:SARTF). The pharmaceutical and lab equipment company's quarterly results showed waning demand, and we believe the company is facing higher uncertainty surrounding its pace of recovery in the next 12 months. We have exited the position. Adyen. The Netherlands-based payments company's stock fell after its first-quarter earnings release. The company saw strong volumes, but weaker transaction fees caused revenue to slightly miss expectations. The reported lower fees most likely fueled competition fears for the market. Edenred. Shares of the payments company sold off through the quarter as investors weighed potential regulatory risks. The French government has opened a widening investigation into tax exemptions for meal vouchers, which now includes the country's audit body. Barclays (BCS). We bought shares of the British multinational bank as the company has delivered on its cost savings program. We also expect capital markets activity to increase through this year and next, which should prove beneficial for Barclays. Universal Music Group (OTCPK:UMGNF). We initiated a position in the company as its results over the past few quarters have confirmed a pricing-led inflection in revenue growth. Fast Retailing (OTCPK:FRCOY). Following a meeting with management, we became more concerned about the company's China operation, where overall consumer demand has been weak. Its Uniqlo subsidiary also has some of its own operating issues in China, which will take multiple years to improve. We decided to exit the position. UBS Group (UBS). The bank faces a potential new regulatory requirement for significantly higher capital. This would meaningfully reduce the cash return we had originally expected; therefore, we decided to exit the position. The portfolio continues to invest in companies we believe are strong and improving and have improvement that is sustainable. Our process is based on individual security selection. Some of the portfolio's key holdings are highlighted below. Taiwan Semiconductor Manufacturing Co. The firm continues to benefit from growing global semiconductor demand. The company's confidence in its capacity plans is backed up by customer demand related to long-term megatrends, in our view. Novo Nordisk. We believe the pharmaceutical company should continue to see accelerating growth trends due to the launch of Rybelsus, which is used to treat Type 2 diabetes, the approval of semaglutide(the chemical name of Rybelsus) to treat obesity and a full phase 3 product pipeline. ASML Holding. This company is a leading supplier of lithography machines used in semiconductor manufacturing, including specialized chips required for artificial intelligence applications. Its new orders have increased significantly, and we expect further improvement to provide sustainable growth for the next couple of years. SAP. The enterprise application software company stands to benefit from strong momentum in its cloud computing business and the secular AI theme, which management believes will be transformative for the company. Schneider Electric (OTCPK:SBGSF). The firm benefits from the demand for electrical grid improvements and greater efficiency of electrical systems. We believe Schneider could also benefit from increased investment to upgrade the grid and systems to accommodate electric vehicles and hybrids. RELX. The company provides information and analytics solutions for professional and business customers across industries. RELX has started a multiyear product reorientation in its risk and legal business, driving a small upgrade to organic growth. ICON (ICLR). ICON provides outsourced clinical trial and commercialization services to the pharmaceuticals industry. We expect the company's profit trends to accelerate given its recent strength in new business and ICON's acquisition of PRA Health Sciences. NEXTDC (OTCPK:NXDCF). The Australia-based company develops and operates data centers. Capacity demand is expected to increase tremendously due to investment in AI as Australia offers an ample power supply. We believe NEXTDC should see margin expansion and a pricing tailwind from its depth and breadth of demand. London Stock Exchange Group (OTCPK:LDNXF). The financial exchange has a strong balance sheet, has demonstrated improvement and is growing business in an area of financials we believe is more shielded from the risk of falling interest rates facing banks and other financial institutions. Keyence (OTCPK:KYCCF). Keyence is Japan's leading domestic supplier of sensors, measuring equipment, vision systems and programmable logic controllers. We believe Keyence is well positioned to benefit from a broad range of manufacturing trends such as increased quality control, traceability and machine guidance. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

American Century Emerging Markets Fund Q2 2024 Commentary

Emerging markets ('EM') stocks advanced and outperformed developed markets equities. EM stocks received a boost from artificial intelligence ('AI')-related stocks, especially in June. Taiwan and China led markets higher, fueled by AI and expectations for accelerating demand for chips from data centers and edge or on-device AI. The Chinese market rebounded amid supportive policy measures and stronger economic data. India, South Africa rallied. The incumbent Indian prime minister's victory lifted investor sentiment around policy continuity. South African stocks rallied on news of a post-election unified government. Conversely, markets in Brazil and Mexico declined. Brazil struggled with hotter-than-expected inflation, while political uncertainty weighed on Mexican stocks amid concerns around the ruling party's concentrated power. Positioning in health care dampened returns. An overweight to the sector relative to the benchmark and stock selection detracted, led by weakness for drug manufacturers Sun Pharmaceutical Industries and Samsung Biologics. We believe that Samsung Biologics, in particular, can capitalize on growing demand for biologics contract development and manufacturing, given its world-leading capacity. The industrials sector hurt relative results. Stock selection weighed on returns. The largest individual sector detractors included aircraft manufacturer Embraer (ERJ), battery maker Contemporary Amperex Technology Co. and solar inverter and energy storage system supplier Sungrow Power Supply. Embraer shares pulled back as potential catalysts, such as stronger orders for commercial and defense aircraft, have yet to materialize. Chip stocks drove relative gains. Stock selection and a favorable overweight in the semiconductors and semiconductor equipment industry relative to the benchmark added substantial value during the quarter. South Korea-based SK hynix (OTCPK:HXSCF) and fellow chipmaker Taiwan Semiconductor Manufacturing Co. (TSM) were among the leading individual contributors as the industry has benefited from improving demand and a stronger outlook for AI chips and high bandwidth memory. BIM Birlesik Magazalar (OTCPK:BMBRF). We believe the Turkish retailer's positive traffic momentum supported shares, while solid results confirmed strong execution, with industry-leading growth, market share gains and margin improvement. Our research indicated BIM is well positioned for a slower consumer environment as the government aims to bring down inflation. SK hynix. According to our research, strong high bandwidth memory demand and a recovery in memory prices following production cuts has fueled an improved memory price outlook and higher price assumptions. We think SK Hynix's dominance of the high bandwidth memory market has supported shares amid raised earnings forecasts to reflect higher-than-expected chip prices. Taiwan Semiconductor Manufacturing Co. Investors rewarded TSMC's robust earnings visibility from expanding generative artificial intelligence demand and leadership in leading-edge chips with rebounding margins. In our view, high utilization from advanced nodes and potential price hikes have the potential to drive further growth. Cemex (CX). We believe the stock's weakness was driven by the drop in the Mexican equity market and some cooling in Mexican construction activity. We also think onshoring continues to support the Mexican and U.S. economies and that additional infrastructure projects for needed housing and roads will likely drive further cement demand growth. Bank Rakyat Indonesia Persero (OTCPK:BKRKY). Shares of this Indonesian bank continued to decline from a recent all-time high amid investor concerns about asset quality, particularly given headwinds in the microlending segment. Our research also indicated persistent above- average lending costs weighed on the stock. Sands China (OTCPK:SCHYY). The casino operator's first-quarter results missed analyst expectations due to unfavorable win rates on high-minimum wagers and disruptions from ongoing construction. Consensus earnings estimates were also adjusted lower during the period. InterGlobe Aviation (JOBY). Our research indicated low-cost Indian carrier IndiGo has a commanding share of the underpenetrated domestic market amid a post-COVID-19 revival in passenger volumes, which are expected to double by 2030. We believe IndiGo stands to benefit from strong fare trends, new airport developments and ongoing international expansion. Contemporary Amperex Technology Co. According to our research, despite market oversupply,CATL has maintainedprofitability through its technology and cost advantages.We believe CATL leads its global peers in technology offerings, cost competitiveness and financial stability in the new energy vehicle and energy storage system battery markets. Vale (VALE). Our research showed that the Brazil-based global mining giant's margins have come under pressure, reflecting lower iron ore prices and slightly higher costs. Localiza Rent a Car (OTCQX:LZRFY). We exited the Brazil-based car rental company, given what we believed was uncertainty due to the lack of visibility on vehicle prices(and thus depreciation). In our view, falling car prices could prevent meaningful earnings expansion in the foreseeable future. The portfolio continues to invest in companies where we believe financials are strong and improving but share price performance does not fully reflect these factors. Our outlook remains constructive. With inflation pressure lessening and monetary policy easing in its early stages, we believe emerging markets economies could grow more than twice the rate of developed markets. Though the Federal Reserve's (Fed's) higher-for- longer stance has deterred aggressive moves by EM central banks, we think a gradual broadening of easing in the second half of the year could be likely as inflation continues to moderate. China's economy got off to a good start, but the property market remains a headwind. China's economy grew faster than expected in the first quarter. However, data have shown some recent signs of softness, suggesting that the domestic demand recovery hasn't fully found firm footing. Our research has indicated that the housing market continues to face downward price pressures from excess supply. Though the direction of property market policy is encouraging, we think housing activity will likely remain weak through the end of the year. Electronics trends spur earnings growth in Asia. Strong exports from South Korea and Taiwan have been driving continued expansion in electronics manufacturing activity. We expect the build-out of artificial intelligence infrastructure to remain a growth catalyst and have seen signs of a recovery in regular servers. Latin American central banks have become more cautious. Political noise, inflation falling at a slower pace and the Fed's more hawkish stance are influencing the banks' measured approach. According to our research, broader growth has held up, and trends such as trade protectionism and sticky raw materials' prices have been positive. Despite post-election volatility in Mexico, supportive economic factors, such as near shoring and remittances, remain in place, in our view. In Brazil, we believe economic activity has also remained resilient with private consumption supported by the tightness in the labor market. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.